July 16, 2017

Emerging Market 7 (EM7) drives global growth twice as much as G7

In an article of 14 July, Ayhan Kose, Non-resident Senior Fellow at the Brookings Institution, estimates that the seven largest emerging markets (EM7) - China, Russia, India, Brazil, Turkey, Mexico, and Indonesia, are expected to deliver about 50% of global growth in 2019, compared with a contribution of only 25% from the G-7's major advanced countries - France, German, Italy, Japan, United Kingdom, and nited States.

He reckons that as a group, the EM7 should speed up to 4.8% growth this year, rising to 5.2% in 2019 while G-7 growth is expected to moderate from 1.7% in 2017 to 1.5% in 2019.

According to Kose, a 1% increase in EM7 growth corresponds to 0.9% expansion in other developing economies and 0.6% increase in global growth at the end of three years.

The largest economy in each bloc—China in the EM7 and the U.S. in the G-7—produces half of its group’s output. This implies that its own slower growth notwithstanding, China remains a major driver of global growth.